Are Lease Renewals Limited in Some Condo Buildings in Ontario?
Many condominiums have rules against short-term rentals, and they are usually phrased something like this (emphasis is mine):
The term of any lease and any renewal thereof shall be for a period of not less than one (1) year.
No transient use. For the purposes of this Rule, any “transient” use of the unit includes, but is not limited to, the use or occupancy of a unit for more than one (1) period of less than six (6) months in any particular period of twelve (12) consecutive months.
This is an interesting phrasing, likely borrowed from other (non-Ontario) jurisdictions. This is because the Residential Tenancies Act, section 38(1), (the “RTA”) provides:
Deemed renewal where no notice
38 (1) If a tenancy agreement for a fixed term ends and has not been renewed or terminated, the landlord and tenant shall be deemed to have renewed it as a monthly tenancy agreement containing the same terms and conditions that are in the expired tenancy agreement and subject to any increases in rent charged in accordance with this Act. 2006, c. 17, s. 38 (1).
Same
(2) If the period of a daily, weekly or monthly tenancy ends and the tenancy has not been renewed or terminated, the landlord and tenant shall be deemed to have renewed it for another day, week or month, as the case may be, with the same terms and conditions that are in the expired tenancy agreement and subject to any increases in rent charged in accordance with this Act. 2006, c. 17, s. 38 (2).
Same
(3) If the period of a periodic tenancy ends, the tenancy has not been renewed or terminated and subsection (2) does not apply, the landlord and tenant shall be deemed to have renewed it as a monthly tenancy, with the same terms and conditions that are in the expired tenancy agreement and subject to any increases in rent charged in accordance with this Act. 2006, c. 17, s. 38 (3).
Simply put, in Ontario, all fixed-term one-year residential tenancies are deemed to renew on a month-to-month basis once the initial term expires unless the tenancy is renewed or terminated by some other method (in accordance with the RTA).
This is, in my view, a problem, because Ontario law (and the common law, in general) is very clear that a tenant of a condominium unit cannot have rights greater than that of the landlord in respect of the unit. This is why, for example, a condominium with no-smoking or no-pet clauses in its by-laws and/or rules will have the rules prevail over the RTA when it comes to tenants in the building.
What does this mean? For any condominium in Ontario with the above language in its by-laws, landlord/owners (and tenants, see below) of the said units can technically argue that Section 38 of the RTA has been overridden in the same way that Section 14 has been overridden. Although the lease cannot be terminated (Section 37(1) of the RTA forbids this), it can be argued that the only renewal option available to the tenant is to sign a successive one-year lease.
Absent that renewal, the landlord must issue an eviction notice (N5) for substantially interfering with the Landlord’s lawful right, privilege or interest (since violation of the by-laws and rules will cause the condominium board to enforce against the owner, with costs, potential liens, etc.). Practically speaking, the Landlord can accept a deemed renewal in accordance with section 38 and wait for the condominium board to a) take notice and b) start enforcement mechanisms, but it remains an inconsistency that I am certain is unintended.
This requirement cuts both ways! Although the rent provisions of the RTA will still operate between renewals (a required one-year successive term does not permit unlimited rent increases), a landlord can arguably require tenants commit to one-year tenancies each year and have recourse against the tenant if the leave the unit prematurely (good for cash flow). Tenants, conversely, can each year protect themselves absolutely against certain kinds of evictions by requiring one-year renewal leases at each opportunity (good for security of the tenure).
I am not certain if this has ever come up in the history of Ontario renting, but it would be an interesting argument to resolve if it ever did, and would certainly have some material effects on the market for units in the condos buildings with this clause in it.